Coal Gasification Could Unlock Coal’s Future

The future of coal generation is about two months away. That’s when Duke Energy will fire up its 618-megawatt coal gasification plant in Indiana, which can also run on natural gas. While the project has endured cost overruns and heavy criticism, the company says that it will be clean, efficient -- and well worth it.

Coal has come to a fork in the road: Relying on the older, less efficient plants is now a war-torn path that has been beaten down by a heavy stream of regulations and a flood of newfound shale-gas. Betting on the future means making investments in new technologies that are able to burn coal more efficiently.

Duke Energy’s coal fleet is among the oldest in the country. It is replacing most of that with combined cycle natural gas plants, which release about half the emissions as coal and which are relatively painless to permit. At the same time, natural gas prices are comparable to those of coal, right now.

However, if natural gas prices rise because of the added industrial demand -- and they will -- utilities will need to be diversified. Duke’s thinking: Indiana has a plethora of coal reserves, which if used in combination with emerging coal generation technologies, can be as clean as natural gas.

“We have chosen to build this integrated coal gasification technology because this is a more acceptable way to burn coal,” says Lew Middleton, a spokesperson for Duke Energy. “This allows us to take advantage of a relatively inexpensive and abundant resource right here in Indiana.”

The major obstacle along the way has been the huge price tag. Back when the idea was first proposed in 2007, it was to tally about $1.9 billion. But it has now racked up about $3.5 billion in bills, with the cost generally split between the public and private sectors. Customers’ monthly rates will also rise to defray the expenses. Middleton says that the initial estimates jumped because the price of raw materials has risen: steel, concrete and wires.

Turning coal into natural gas has a long history. But doing so at commercial scale and then selling that power into the retail electricity markets is a new thing. Duke’s Indiana plant, meanwhile, has the potential to capture and bury carbon dioxide.

Tough Sell

Could Duke's venture become a harbinger of things to come? Because of the utility's access to Indiana coal, it fits with Duke's goals, says Middleton, who adds that this plant is expected to become the company’s most efficient means of generating electricity.

However, each region of the country has different attributes and they would need to make their own economic evaluations, he says. Some areas, in fact, are considering these investments, although high upfront costs and environmental opposition are issues in certain places.

Consider: Power plant developer Tenaska proposed a coal gasification facility in Illinois, arguing it was a 40-year endeavor. But after fighting green groups determined to thwart a coal plant and Exelon Corp. that opposed the public subsidies, it relented. Tenaska, instead, will build a natural gas unit that it says could later be modified to gasify coal.

“It makes absolutely no sense to take coal and make synthetic natural gas out of it,” says Paul Grimmer, chief executive of Eltron Research in Boulder, Colo. “The processes are too expensive. But if you see a huge run-up in natural gas, it may then make sense.”

How does coal gasification work? It removes the sulfur dioxide, mercury and carbon dioxide from the "syngas" before it is combusted. And because the "syngas" is cleaner than raw coal, lower quantities of nitrogen oxide and particulate matter are produced during the combustion or burning process. The carbon is more concentrated, which makes it easier to capture.

All the potential developments come with a price tag. But if fewer tonnages of coal are burned, the economic and environmental values will add up and become clearer. For each unit of coal that is input into the coal gasification system, 60 percent of it is supposed to come out as pure energy. That is compared to about 35 percent for a traditional pulverized coal plant.

FutureGen, in which the U.S. of Department of Energy is providing $1.1 billion, or 80 percent of the necessary funds, is another coal gasification project in Illinois. It is expected to be 200 megawatts. The plan is to use oxygen to help burn the coal in such a way that is would nearly eliminate many harmful emissions. The plant would also help concentrate the carbon so that it could be captured.

Coal gasification comes with risks. But diversifying the nation’s electric generation is prudent and it’s something that would hedge against gyrating natural gas prices.

EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been honored as one of MIN’s Most Intriguing People in Media.

Thanks a lot for providing

Loss of Tax Credits Could Doom Projects

- May 21, 2013 - 7:22 AM

The future of coal gasification will be likely in doubt if US Representative Mike Pompeo, R-Kansas is successful with his proposed legislation HR 259: http://www.gpo.gov/fdsys/pkg/BILLS-113hr259ih/pdf/BILLS-113hr259ih.pdf

The Energy Freedom and Prosperity Act would eliminate Section 48 & 49 tax credits along with other non-oil and gas subsidies.

The legislation does not eliminate the intangible Drilling Cost and Percentage Depletion subsidies for oil and gas, along with several other unique tax provisions the industry receives.

IGCC efficiency

- Apr 22, 2013 - 10:46 AM

I have to agree with the previous commentor who questioned the efficiency 60% for IGCC power plants. The efficiency of combined cycled gas turbine plants running on natural gas have reached 60 to 61% LHV or roughly 54% HHV. The efficiency of supercritical pulverized coal is about 41% LHV but is very nearly the same in HHV as coal is predominantly carbon. Ultra-supercritical is a bit higher.

IGCC plants utilize air from the gas turbine compressor as the O2 source for the gasifier. The result after cleanup of the gas is generally a mix of N2, CO, H2, CH4, and a bit of CO2. The gasification process uses up energy due to boosting the air pressure or product gas pressure, gas cleanup, and heat losses in the process. In a report to ERCOT, IHS CERA put the efficiency of IGCC at 40.6%. If one takes the process still further to convert all the CO to CO2 and CH4 so the CO2 can be captured, one introduces still more losses in the system so the efficiency drops even farther.

Tenaska

- Apr 22, 2013 - 9:16 AM

Ken, I hope all is well. I enjoyed your article today on Duke Energy’s plant in Indiana.

Just a short note that Tenaska has proposed a natural gas plant in Illinois (Taylorville) but it still wants a multi-year power-purchase agreement (30 years last time I checked) codified in legislation before they will commit to building it. Tenaska says it needs that guarantee in order to get the financing to build the plant.

Because Illinois is exporting about 30% of the electricity our coal, nuclear and wind facilities generate, there is currently no need for the Tenaska plant and the legislation is currently not going anywhere (though, as with all legislation, that could change at some point).

I wanted to let you know that as your article make it look like Tenaska is building the plant in Illinois, but the best you can say about it is that they are proposing the plant and it has not been approved.

Feel free to call me if you’d like more context around this.

I couldn’t agree with you more that we need a diversified electricity generation portfolio. A “four-legged stool” made up of coal, nuclear, natural gas and renewable energy would allow our economy to weather the inevitable ebbs and flows of each form of generation.

Efficiency

- Apr 22, 2013 - 8:19 AM

Ken,

The way I read your recent article on Edwardsport IGCC, your appear to say that IGCC is nearly twice as efficient as a traditional coal plant (60% vs. 35%). From everything I understand, an IGCC plant is approximately the same efficiency as a modern supercritical unit, in the neighborhood of 37%-39%. The actual combustion process in the combined cycle combustion turbine may be close to 60%, but that doesn't take into consideration the energy to convert the coal to syngas and to clean it up which is substantial.

Question?

Ken,I am going to throw something out there that I do not know the answer to:

Is it accurate to say that “using coal in combination with emerging coal generation technologies can be as clean as natural gas?”

Often, in energy-related fields (transportation, electric power generation), proponents say X is “as clean” as Y if the air emissions coming out of the tailpipe or stack equally meet current EPA emissions regulations (it is in this sense that California came up with the “zero-emission vehicle,” meaning the electric car with emissions at the power plant rather than at the tailpipe). The other upstream, midstream, and downstream impacts—such as water and energy used in mining, groundwater impacts, disposal of wastes, differences in pollutants that are not hitting their limits or are not yet regulated (note that it is only now—after decades of being regulated elsewhere—that the toxic group of gases known as “Hazardous Air Pollutants” are being regulated at coal fired power plants—one of their largest sources!)—are thus overlooked.

Again, I don’t know the answer. But I am skeptical that it is “as clean” to dig rocks up in Wyoming (or Illinois for that matter), ship them using diesel fuel to a plant site, input energy to convert them to gas, dispose of the substantial non-fuel remainder (which will likely be characterized as “beneficial use”), and then—but only at the generator and smokestack—burn the result as cleanly as natural gas.

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